The Definition Of Sourcing – So Many Vital Processes

There are a number of different definition of sourcing but mainly there are two major definitions: strategic sourcing and global sourcing.

Definition of Sourcing I – Strategic Sourcing

The first Sourcing definition i.e. strategic sourcing is a concept that was popularized by major consultancy companies in the late 1980’s 1990’s and is now considered a standard purchasing strategy used by many blue chip companies.

However, the most popular definition of sourcing is strategic sourcing. This is the process of taking advantage of purchasing opportunities by continually reviewing current needs against purchasing opportunities.

Strategic sourcing was first established by General Motors in the 1980’s and is now a common business purchasing tool. The rise of China and its manufacturing capabilities has opened up numerous strategic purchasing opportunities.

Strategic sourcing is often used for high valued services, ad hoc purchases and core large values purchases. There are several processes within the strategic sourcing process and these are:

  • Evaluation of the company’s current purchasing cycles.
  • Evaluation of what is currently available in the supply market.
  • A review of the cost benefit analysis of using other suppliers.
  • A review of potential vendors.
  • An update of the current procurement strategy.
  • Negotiations with potential vendors to ensure that they meet the new procurement strategy and cost benefit analysis.
  • Implementation of the new vendor relationship.
  • On a continuous process, review and update the strategic sourcing.

Definition of Sourcing II - What is Global Sourcing?

The second sourcing definition i.e. global sourcing is sourcing products and (sometimes services) irrespective of national boundaries. It is particularly popular within the EEC countries in Europe and Asia. Both of these areas are less concerned with geographic boundaries.

The rise of Chinese and Indian manufacturing capabilities has meant that sourcing from these countries has greatly increased in the past few years. Purchasing companies are seeking low labor and production costs which are not countered by high delivery costs. Many improving countries also offer attractive tax and tariffs to encourage purchasing from them.

Another definition of sourcing is that of sourcing personnel. This is use of proactive searching for potentially highly skilled members of staff that may provide your company with a competitive advantage. Sourcing of staff is also a complex procedure and is used when numerous part time or short term staff are required.

The most common definition of sourcing is the process of identifying potential vendors, conducting negotiations with then, and then agreeing supply contracts with these vendors.

Learn More About...

Eight Tips on Selecting Domestic Sourcing

These Eight Tips to domestic sourcing considerations will help your business make sound decisions whether to use domestic sourcing or global sourcing

Seven Tips on Managing Low Cost Country Sourcing

There are 7 critical tips to ensuring low cost country sourcing is truly low cost. Ignore them at your peril.

Nine Tips on Selecting Strategic Sourcing Consultants.

These nine tips on Selecting Strategic Sourcing Consultants can give the manager driving change in the organization the right way to reach out.

Establishing A Good Strategic Sourcing Methodology

3 Steps to Establishing a Good Strategic Sourcing Methodology for enterprise wide savings

Sourcing Products in China Report

Warning: Don’t even think of buying or sourcing products in China until you’ve read this. Learn the do’s and don’ts of sourcing products in China

Strategic services sourcing – some Do’s and Don’ts

Strategic services sourcing experts apply special skills to identify services which are truly strategic and offer do’s and don’ts

Fundamentals of strategic sourcing process

The strategic sourcing process – the 7 steps towards a strategic Sourcing process


Return from Definition Of Sourcing to Purchasing Procurement Center Homepage

Untitled Document

Get Your Report Now


First Name
Last Name
Job Title
Company
Email (Where to send report)
Phone
City
Country
Please send me weekly procurement/sourcing tips and special offers on trainings



Purchasing & Procurement Video Presentations


Tender Management Process

 


Procurement Best Practices


Purchasing Managers Roles


Purchasing Savings


How to do spend analysis

 


Winning Supplier Negotiations:Who Really Wins & Why?

 


Purchase Price Index